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Insights

The State of the GTA's Housing Market: An Interview with TRREB's President Jennifer Pearce

Blue sky above a flock of single-family homes.

On February 8, the Toronto Regional Real Estate Board (TRREB) unveiled its 2024 Market Outlook and Year in Review report, offering a detailed forecast on trends in home sales, new listings, and average prices. The report delves into the pressing issue of housing unaffordability and assesses its effects on the mental and physical well-being of GTA residents. It highlights the urgent need to increase our region's housing supply.

The Toronto Region Board of Trade has consistently advocated for measures to improve the availability of housing that is affordable in our region. Our efforts are rooted in thorough research, as demonstrated by our 2021 'Meeting in the Middle' report, which underscores the urgent need for a shift towards more diverse housing solutions. This is further reinforced by our report series in partnership with WoodGreen (that consists of Defining the Problem, Modelling Solutions and The Cost of Inaction) which calls attention to the critical housing challenges faced by our region’s essential workers.

We sat down with Jennifer Pearce, President of the Toronto Regional Real Estate Board to understand more about the evolving landscape of the GTA's housing market.

Your 2024 Market Outlook echoes the Board's emphasis on the 'missing middle' as a solution to the GTA's housing crisis. Can you elaborate on the main barriers to its development? How optimistic are you about overcoming these challenges, and what specific actions do you believe are needed to promote the 'missing middle' housing effectively?

 

Jennifer Pearce: There are several barriers when it comes to building diverse housing throughout the GTA. The complex planning and lengthy approvals process create a roadblock to building housing at the pace we need, and it’s adding to the overall cost of housing.

The City of Toronto specifically needs to ensure the current effort to create as of right zoning along major streets and avenues is accommodating enough to spur new builds. By restricting what type of housing is built, municipalities are limiting the housing options for future generations.

And, there’s no question that the current supply of homes can’t meet the demand of our growing population. Policymakers need to prioritize "missing middle" housing that can offer a more diverse and affordable range of housing options. This will give builders the opportunity to create more multi-family housing units and purpose-built rentals that can be scaled up much faster than the one-off development proposals we are currently familiar with in Toronto. It’s also important to reduce red tape that prevents the building of more homes.

What is the Missing Middle?

The "Missing Middle" is a term for diverse, affordable housing types like duplexes, triplexes, townhomes, and small apartments that fill the gap between single-family homes and high-rises. Building the missing middle aims to address housing shortages by promoting density and diversity within existing neighborhoods, making cities more livable and sustainable.

The federal government has recently emphasized modular housing as a key strategy to combat the issue of housing unaffordability across Canada. Given this policy direction, what is TRREB's stance on the adoption of modular housing within the GTA's housing landscape? What recommendations would TRREB make to ensure its effective implementation and integration into our housing strategy?

 

JP: The housing affordability challenges facing the GTA are a direct result of an inadequate diversity in the mix of housing types and a lack of overall housing supply available to residents. That’s why TRREB supports modular housing within the housing landscape. 

Working with innovative building solutions, such as mass timber, modular and pre-fabricated homes, has the potential to drastically reduce construction costs and time. This is also an opportunity to create more environmentally sustainable housing, and allows cities like Toronto to scale up housing projects in the numbers we need. 

To ensure modular housing is effective in the GTA, policymakers must ensure stakeholders receive the resources they need to ensure projects are affordable and stable. It’s also important for policymakers to shift away from unsustainable revenue tools, like new or increased taxes on new housing or housing transactions, and instead should focus on boosting housing supply, improving affordability, and making it easier for young families to afford a home in the city. 

What is 'As-of-Right' Zoning?

 "As-of-right" development allows property owners to build or modify buildings without needing special approvals, as long as their plans comply with local zoning laws. This concept is crucial for simplifying the process of creating 'missing middle' housing, making it faster and less costly to increase the diversity and affordability of housing within communities.

Given the complex nature of housing unaffordability, collaboration across various sectors is crucial. From TRREB's perspective, which collaborative measures or strategies would be most effective in addressing the GTA's housing affordability crisis? How can stakeholders from the real estate sector, government, and community groups work together more effectively to implement these solutions?

 

JP: The choices that all levels of government make today will undoubtedly impact the state our region finds itself in tomorrow – for better or worse. 

One strategy is looking at other jurisdictions in North America and around the world, such as Montreal, Portland, Minneapolis, Austin and Auckland that have shown adjusting zoning allowances for mid-rise residential buildings along major streets has the potential to offer lower-cost housing types on residential land that was previously zoned strictly for higher-cost single-family homes.

That’s why it’s important for policymakers and stakeholders to work together to effectively implement these solutions. At TRREB, we’ll also lend a hand because we are passionate about our mission to share guidance and lend support on these pressing housing issues. 

A key finding of the report highlights the significant impact of housing unaffordability on mental health. Can you expand on exactly how housing costs affect mental well-being? How is this impacting the GTA? What collaborative measures should the sector take to effectively tackle this issue?

 

JP: In our much-anticipated 2024 Market Outlook and Year in Review report, TRREB commissioned new research with CANCEA to uncover the impact unaffordable housing has on residents. 

And, we found that the housing unaffordability crisis extends beyond economic concerns – it affects the well-being of people. Our findings indicate that the total negative social value cost for residents living unaffordably in the GTA is estimated at $37 billion in 2023. This amount is significant, as it represents about 20 per cent of Ontario government revenues and over 4.5 per cent of Ontario’s annual GDP. 

In the research we found two important insights.

  • A household is considered unaffordable if it spends more than 30 per cent of its income on housing. This applies to 29 per cent of all households in the GTA and 23 per cent of residents. Among these households, 41 per cent spend 50 per cent or more. 
  • We also found that households spending more than 50 per cent of their income on housing experienced a lower well-being score – comparable to some of the most significant health challenges faced by a society, including cancer.

Policymakers, stakeholders, and the community at large must recognize the nature of this crisis. Solutions should not only aim to make housing more affordable but also consider the social and well-being implications. This requires a collaborative effort involving various sectors, including government, health, and social services, to develop strategies that ensure housing affordability while enhancing the quality of life for all residents in the GTA.